The International Monetary Fund expects the United States economy to grow less than previously expected this year and next, but will upgrade Japan's growth prospects on its upcoming world economic scorecard, German newspapers said on Friday.
According to business dailies Handelsblatt and Financial Times Deutschland, the IMF's World Economic Outlook will show the fund expects US growth to reach 3.5 percent this year and dip to 3.3 percent in 2006. In April, the IMF forecast US growth of 3.6 percent for both years.
However, the FTD said the IMF will raise its forecast for growth in Japan to 2.0 percent for this year and next when the report is officially released next week.
The IMF in April had forecast the world's second-largest economy to expand by just 0.8 percent this year, and 1.9 percent in 2006.
But new figures this week showed Japan's economy grew more than twice as fast as initially estimated in the second quarter, expanding by 0.8 percent in the quarter and taking annualised growth to 3.3 percent, on a par with the United States.
The healthy growth figures and reformist Prime Minister Junichiro Koizumi election victory on Sunday have fuelled hopes of a turnaround in the world's second-largest economy.
The FTD said the IMF had also reduced its forecast for economic expansion in Britain, seeing growth of 1.9 percent this year and 2.2 percent in 2006 from an earlier expectation of 2.6 percent growth for each year.
Handelsblatt said high oil prices and the fallout from Hurricane Katrina, which has devastated large parts of the US Gulf coast, were behind a cut to the global growth outlook.
It said the IMF has cut its global outlook for 2006 to a still-healthy 4.3 percent, from 4.4 percent, but the current year's forecast of 4.3 percent growth would stay.
Both the Handelsblatt and FTD said growth forecasts for the eurozone will be cut to 1.2 percent this year, from 1.6 percent, and 1.8 percent in 2006, from 2.3 percent, largely in line with the European Central Bank's latest outlook.
Germany, the region's largest economy, is expected to expand by 0.8 percent this year and 1.2 percent in 2006, the paper said, a cut from April's 1.9 percent.
The FTD said the IMF thought eurozone interest rates, held at 2 percent for more than two years, were appropriate but might have to be revised if growth prospects worsened. Most economists expect the ECB's next rate move to be a rise but not until well into 2006.
Within the eurozone, the FTD said the IMF's growth expectations for France and Italy were also marked down.
The French economy is now seen growing by 1.5 percent in 2005, and 1.8 percent next year. Italy's economy will stagnate this year and grow by 1.4 percent next year.
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